Careavan’s struggle comes down to managing growth

Alex Gary

Wednesday

Oct 31, 2007 at 12:01 AMOct 31, 2007 at 5:30 PM

The Register Star is profiling a small business each month that has managed to keep its doors open in tough economic times. We identified companies from a list of Small Business Administration 7(a) loan recipients that dates back to 1965. This is an example of one of the businesses. Perhaps papers would like to adopt the idea and develop it for their own markets.

Nicholas Licari considers each person who gets in one of his Careavan vehicles from Madison and Milwaukee in Wisconsin to Belvidere and all parts of Winnebago County to be “a part of my family.”

As a small-business owner, Licari is in the somewhat enviable position of having “a family” that is growing so quickly his challenge in the future will be to have enough vans and drivers to meet the demand.

“When we started, we had three vans and were giving about 60 rides a day,” said Licari, president of Careavan Inc., based in Loves Park, which gives elderly and disabled residents in a 100-mile radius rides to and from work, to doctor’s offices or grocery stores. “Today, we’re up to 20 vans and as many as 360 rides a day. And the demand is inelastic. Our demand is irrespective if times are good or bad.”

Licari started the company in 1996 thanks in part to a $90,000 loan, of which $72,000 was backed by the Small Business Administration’s 7 (a) loan program. The program is geared toward high-risk ventures that banks would be unlikely to back without help.

Careavan is routinely mistaken to be a not-for-profit or social service agency.

“Many people still believe we are part of a public entity and we are not,” Licari said. “We are a for-profit operation solely owned by myself and my wife.”

It did grow out of a public entity. Licari was hired by Winnebago County in the early 1990s to administer a paratransit system for the elderly and handicapped. He ran it for five years before the county decided to move the program “in house” as part of the Rockford Mass Transit District.

Licari thought he could build a niche in serving the area’s growing low-income population. He said his business has grown through service agreements with several municipalities and social-service agencies and because of its focus on its riders.

Unlike public transportation systems that most of the time can offer only curb-to-curb service, Careavan drivers provide “door-to-door” service. Drivers are required to go to the door, assist clients to the vehicle, including carrying coats, bags, whatever is needed, drive them to their destination and walking them into the building.

He has about 35 employees, mostly drivers, and he said his constant challenge is finding and keeping people willing to meet his customer service standards.

“Our belief is that the client is the most important person in that vehicle,” Licari said. “There are some people who aren’t able to put themselves second, and those are the people who don’t stay here very long.”

Like most small-service businesses, it’s hard to hold on to those top employees. With vehicle maintenance costs of up to $7,000 a month, he can offer only very limited supplemental health insurance through Aflac Inc. The pay range for drivers is $9- to $12-an-hour, with one paid week of vacation and four sick days.

“We’ve lost very good employees because we can’t offer a high level of benefits,” Licari said. “A regular family health-care policy would cost between $3 and $3.50 an hour per employee. I can’t afford that and still remain competitive. You can’t go to someone on a fixed income and tell them their ride is going to be $100. It doesn’t work.”

Careavan’s base rate is $20.50, with several variations based on need and distance.

The ability to find employees willing to provide the level of service he demands at the level of pay he can provide will be even more challenging over time. When Licari was working toward a Master of Business Administration, he wrote his thesis on the aging of America. He said national statistics show the number of people over the age of 62 will grow 70 percent by 2030. That’s his customer base.

“I haven’t considered the work force availability long term,” Licari said. “I do understand that we are moving globally from a manufacturing society to a service society. That’s just the way it’s going to be so service is going to become the only place to be.”

Assistant Business Editor Alex Gary may be reached at 815-987-1339 or at agary@rrstar.com.

Small Business Survivor advice

Careavan Inc. President Nicholas Licari said operating a small business is more than a job, it becomes a lifestyle.

“Whatever you are going to get into, know the business, understand the business. You need to go through the complete analysis of your strengths and weaknesses.

“And then you have to like to do it. It’s only been in the last three years that I haven’t driven. I was a regularly scheduled short-route driver, but it got to be too much. I was driving, trying to dispatch, do payroll, conduct interviews.

“I usually get home at 8 p.m. and when I’m home I carry the pager and I have a radio with me all the time. I’m able to link up at home. I can balance a check book at 2 a.m. At times, the only time I’m not working is when my eyes are closed and I’m sleeping.”

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.